As the role of energy management has shifted to wider environmental and corporate responsibility, energy managers, CSR and facility managers, as well as finance directors are all playing an important role in achieving efficiencies. Alan Waller of Greenstone Carbon Management explains the challenges and opportunities that organisations face in monitoring and reducing their energy and carbon emissions.
The key objective of energy management is of course to minimise energy consumption and its related costs. This function has been helped greatly by the implementation of energy management systems (EMS) and automatic meter readings (AMR) which provide accurate and time relevant meter readings, and as a result significantly reduce the time spent collecting and verifying data.
However, as the measurement and reporting of the carbon emissions associated with business activity and consumption becomes a requirement, an AMR reading can no longer deliver a full appraisal of energy consumption. Organisations are now implementing carbon management systems (CMS) alongside existing EMS for the ongoing measurement, analysis, management and reporting of carbon emissions.
Most CMS solutions also enable the true management of emissions through time series analysis, forecasting and the setting of targets and action plans. Significantly, CMS are providing energy, CSR and facilities managers with control over direct carbon related costs, for example regulatory allowances and voluntary offsets. In addition to this, CMS solutions include the capability to analyse and manage emission sources that have not previously had a dedicated platform, for example travel, waste, water and ICT.
The role of energy managers
The current plans for the CRC Energy Efficiency Scheme (CRC) apply a direct cost to every tonne of carbon emitted by an organisation and require the amount of allowances to be budgeted for at the beginning of the year. The ability to forecast likely emissions is key to predicting allowance requirements and resultant financial costs. Incorporating the impact of any reduction project into forecast scenarios, which can be done in CMS systems, is crucial to allowance purchasing and cash flow.
The monetisation of carbon through the CRC scheme can be the financial and legal argument needed for many of the projects that energy managers may have wanted to implement, but couldn’t demonstrate sufficient ROI on. Projects which are encouraged by the CRC, for example the implementation of automatic meter readings (AMR), could significantly reduce the time spent collecting and verifying data for the energy manager. However, the CRC scheme will also increase the visibility and profile of the energy manager’s work through, for example, the publically available CRC league table which will rank reduction performance.
Although energy managers may be best placed to measure and manage energy, when it comes to wider organisational carbon emissions, they cannot do it alone. They must have the support and funding from management and the cooperation of those throughout the organisation such as facilities managers and CSR managers to cover the behavioural aspects of carbon reduction. The CRC, although placing obligations on an organisation, can be viewed in a positive light and be the catalyst for real improvements to people’s working environment and the performance of the company as a whole.
With the introduction of legislation like the CRC, there is increasing pressure for energy consumption data to be accurate due to the cost of regulatory liabilities and penalties for inaccurate reporting. Carbon represents a new and potentially significant ongoing cost for business and is firmly on the agenda of finance directors. Implementation of a CMS can reduce the potential compliance risks as the data collected is more comprehensive and the risk of calculation errors is removed, meaning reports are more accurate. Going forward, carbon will be budgeted, controlled and reported in the same way as business finance, with the identification of initiatives to reduce emissions and costs becoming paramount.
Expanding reporting to focus on carbon footprint reports is becoming a commonplace activity for most businesses. It is increasingly expected that they will participate in voluntary carbon reporting initiatives, of which there are an ever growing number, including the likes of the Carbon Disclosure Project (CDP), and Global Reporting Initiative (GRI), as well as any compliance reporting obligations, such as the CRC. On top of this the carbon footprint is often included in the annual CSR or shareholder report, and many companies are finding they are also required to report their footprint when tendering for new business.
Reduced energy, reduced costs
Once an organisation has an accurate picture of their energy consumption and carbon emissions, and they become more mature in their reporting of carbon emissions, the focus shifts from simple disclosure to demonstrating year on year emission reductions. In the current economic climate, companies are focused on driving down costs and increasing efficiency. The majority of an organisation’s footprint is created through the use of energy and services such as travel and transport. If a business can reduce its consumption without impacting its operations, it will save costs and positively impact its bottom line, while simultaneously demonstrating reductions in its carbon footprint.
Achieving these win-win reductions can be challenging – businesses with complex operations may not have a detailed understanding of where their footprint arises, and therefore where the greatest scope for savings lie. The fundamental first step in reducing emissions is therefore to build a detailed picture of the company’s carbon footprint, and monitor it on an ongoing basis to identify reduction opportunities, inefficiencies and priorities.